Neonode (NEON) announced this morning that it has signed a license with a second Tier One Global Consumer Electronics OEM in South Korea. Since there are only two Tier One Global Consumer Electronics OEMs in South Korea, it is now crystal clear that Neonode has landed both LG (KRX: 003550) and Samsung (SSNLF.PK).
Neonode already made its first OEM license announcement of this ilk (i.e. "Premier Global Consumer Electronics OEM in South Korea") on 7/23.
As indicated in both releases, it seems like these new Samsung and LG relationships are broad, multi-faceted and will likely yield multiple projects across numerous product lines.
While I expect high-end smartphones to be off the table, until Neonode's flush solutions are commercially ready (by year's end), I believe these relationships will likely yield considerable near term (2014) fruit in "white goods" (i.e. major appliances), which should benefit from Neonode's single side sensor (SSS) and circular form factors.
Having landed LG, Samsung, and a third European OEM (announced on June 19), which is either Swedish based Electrolux (ELUXF) or Robert Bosch GmbH (who might already be an automotive licensee)… Neonode is now dealing with at least 3 (or 4) of the largest global appliance OEMs.
Since there are only two Tier One appliance OEMs in Europe, Electrolux (which is Swedish and was run by NEON's Chairman's father Gosta Bystedt ) and Bosch, which could already be a licensee from the auto side.
NEON also has a few unnamed Tier One Auto OEM licensees... which could be Bosch, as they are in the top-ten in-car-entertainment system supplier rankings.
Considering Neonode's ability to inexpensively replace buttons (which break, and are susceptible to vibration and moisture), and dramatically enhance the aesthetics and functionality of major appliances (like washing machines and refrigerators), I expect Neonode will continue to make inroads at other major appliance OEMs.
Moreover, as hinted to in the two press releases, the Samsung and LG relationships will likely extend into other high volume segments such as tablets, children's tablets (both LG and Samsung have plans/products in this segments), wearables (both LG and Samsung have smartwatch plans - for which Neonode's circular sensor is perfect), feature-phones, printers, and laptops (both Windows 8 and Chrome).
Thus, my updated 2014 financial estimates are now as follows:
- Printer Revenues = $12M
- PC Revenues = $11M
- Auto Revenues = $12M
- Children's Revenues Tablets = $5M
- Handsets Revenues = $4M
- White Goods (Home Appliances) Revenues = $5M
- eReaders Revenues = $6M
- NRE Fees = $3M
- TOTAL 2014 Revenues = $58M
- Cash OPEX = $18M
- Pretax Net Income = $40M
- Taxes (@20%) = $8M
- Net Income = $32M
- Diluted Shares = 40M
- EPS = $0.80
When I apply a 20X forward PE multiple to Neonode's estimated 2014 EPS of $0.80, and then add $9 of present value for a likely IP spinoff, my target price for NEON becomes $27.